What does the new four year deal with Sky mean for the WRU?

Business Editor Sion Barry assesses the new four-year Sky deal to broadcast live games from the RaboDirect PRO 12 league

Sky has struck a deal to televise games from the RaboDirect PRO 12 league

While confirmation that the Millennium Stadium will be the venue for eight games in the 2015 Rugby World Cup took most of the headlines last week, a more significant deal financially was reached with satellite broadcaster Sky.

From the 2014-15 season Sky Sports will broadcast 30 live games a year from the RaboDirect PRO12 league, as well as the competition’s end of season play-offs and final.

The four year deal with Sky Sports was struck with Celtic Rugby Ltd – which has equal representation and equity for the Welsh, Scottish and Irish rugby unions.

While details on which matches will be shown live have yet to be confirmed, Celtic Rugby is continuing its negotiations with terrestrial broadcasters – where on the current deal the lion’s share of funding comes from S4C and BBC Wales – on a new four-year deal from 2014-15 onwards for coverage of other live games.

While the value of the deal with Sky Sports has not been disclosed, it is understood to be around £5m a year – which will provide Celtic Rugby with £20m over the four years to distribute to the three unions, including of course the WRU.

It is understood that it has been structured to take account the number of teams in the league from Scotland, Ireland and Wales – the Italian union, which has two representative sides in the league, has not been included in the deal.

As a result the split is believed to be around 40% each for the WRU and the Irish union and 20% for the Scottish.

This would give the WRU, which then washes television monies through to the four regions – a 40% slice of the pie; or around £2m a year.

The current agreement with the terrestrial broadcasters is believed to be around just over £5m a year. However, with the vast majority of the funding coming from the Welsh broadcasters, this is reflected in how money is distributed by Celtic Rugby to the three unions. While not disclosed it is understood that the vast majority goes to the WRU.

Working on the assumption that it is 70% then on the current deal of around £5.4m per annum – of which S4C and BBC Wales contribute just over £5m – the WRU currently receives around £3.7m a year from Celtic Rugby.

It has to be stressed that discussions are continuing and no deal has yet been reached with the terrestrial broadcasters – who will now have to consider what impact the Sky deal will have in terms of what they might be willing to pay.

The broadcasters themselves confirmed the ongoing nature of discussions in a joint press statement on Thursday.

They were aware of course that Celtic Rugby were looking to split coverage of the RaboDirect, which meant they were never going to continue to commit just over £5m a year from 2014-15 onwards.

Media reports have suggested that the value of the Sky deal – and assuming a new terrestrial deal can be reached – would result in a 50% increase on the current amount.

If correct, and taking account of the new £5m a year Sky Sports deal, then Celtic Rugby are looking for the terrestrial channels to invest around £2.5m a year from 2014-15 – as opposed to just over £5m currently.

If agreed that would provide £10m over the four years – as opposed to just over £20m for the current deal.

However, combined with £20m from Sky, that could provide Celtic Rugby with television incomes for the RaboDirect of £30m over the four years from the 2014-15 season – an increase of £10m on the present deal.

If the same split agreement between the three unions applies to any new terrestrial deal, that would see the WRU receiving an estimated 70% of £2.5m, which is £1.75m.

Add to that the new Sky deal and the WRU could get around £3.7m a year – which is pretty much what it gets now under the single agreement with the terrestrial channels.

It is understood that Celtic Rugby had tried to initiate a bidding war between Sky and BT Vision, which failed to materialise.

It is hoped that Sky can generate significant interest in its coverage of the RaboDirect from viewers in England – and not just among the Welsh, Scottish and Irish diaspora.

The real upside for Celtic Rugby, having had a very successful relationship with Sky and the terrestrial broadcasters – is that it is able to negotiate a significantly improved deal with Sky – or potentially BT Vision – for the 2018-19 season onwards.

It could also hope to get an improved deal from the state-funded terrestrial broadcasters. However, with the BBC faced with a more challenging funding outlook that might be more difficult.

From a broadcasting perspective having Sky Sports showing games from the 2014-15 season in competition with the BBC Wales and S4C, would only improve the quality of the coverage.

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